“Frosty the Goldman” and Other Odes to Subprime Profiteers

January 8, 2008

This video of protesters greeting Goldman Sachs investment bankers outside of their holiday party may be a week or so old, but the sentiments are timeless. And hearing the lyrics to “Frosty the Goldman” would melt even the coldest heart (unless of course that heart belongs to the bankers who profit off the sub-prime disaster.

As ballooning monthly payments on subprime mortgages threaten to tip struggling homeowners into foreclosure, brokers at the Wall Street investment banks that fueled the subprime crisis took home eye popping bonuses this Christmas, up 14 percent from last year.

The Associated Press reports the four biggest U.S. investment banks—Goldman Sachs Group Inc., Morgan Stanley, Lehman Brothers Holdings Inc. and Bear Stearns Cos.—will award an estimated $30 billion in bonuses this year. The bankers at Goldman Sachs will have particularly heavy Christmas stockings. Compensation at the nation’s largest investment bank jumped 20 percent in 2007, which the AP estimated will mean $12 billion in bonuses, or an average of $600,000 per employee.

Unlike most of its Wall Street brethren, Goldman Sachs sidestepped the credit crisis buy betting against subprime mortgages after investing heavily in them—and pushing their lender bank partners to make the risky loans—in previous years, according to “Wall Street and the Making of the Subprime Disaster,” an investigative report written by Kevin Connor for the National Training and Information Center, a coalition of community organizations focusing on economic issues.

“I liken it to selling poison and then betting people will get sick,” said Connor, a former union researcher.

Despite a year punctuated with angst and a deepening credit crisis that has migrated from over mortgaged homeowners to shady lending companies to respectable investment banks to international credit markets, the year end bonuses were still flowing on Wall Street.

From the Associated Press:

Goldman Sachs CEO Lloyd Blankfein reportedly is in line for a bonus of up to $70 million this year, as the nation’s largest investment bank has largely navigated past any mortgage-related losses. Lehman Brothers’ CEO Richard Fuld was granted a $35 million stock bonus for 2007, up 4 percent from last year.
Morgan Stanley, the second-largest U.S. investment bank, reported compensation rose 18 percent to $16.6 billion from $14 billion a year earlier. This comes after the investment bank reported Wednesday the first quarterly loss in its history amid a $9.4 billion writedown due to the credit crisis.

However, CEOs at Bear Stearns and Morgan Stanley gave up their bonuses this year after their companies reported record losses.

Some of the homeowners whose risky mortgages and the investment products built off them funded those $30 billion in bonuses are crying foul. The National Training and Information Center and local partners think the bonuses should be donated to a fund to help refinance the subprime mortgages of people facing foreclosure.

Last week a handful of people greeted Goldman Sachs brokers at their holiday party at the upscale BLVD club on the Bowery. Joe Gould would hardly recognize the place.

The NTIC activists and aggrieved homeowners sang Christmas carols advocating the bankers donate their bonuses to the victims of predatory lending. “At $10,000 per workout, the Goldman Sachs bonus pool could prevent all of the expected foreclosures in 2008 in the United States, shore up the global economy, and make the bank a hero to millions of families,” NTIC said in a statement publicizing the caroling. “Or they could buy more Rolex watches, fur coats, and third homes. Tonight a chorus of homeowners and their neighbors will serenade Goldman Sachs and urge them to do what is right, and payback the bonus to the hard working families that generated their wealth.”

Here are some lyrics:“Goldman, the Two-faced I-Bank”
(to the tune of “Rudolph, the Red Nose Reindeer)

You know Merrill and Morgan and Lehman and Citi
J.P. and Wamu and Bofa and Barclay’s
But do you recall?
The most famous i-bank of all?

Goldman the two-faced i-bank
Gave out very shoddy loans
And if you ever saw them
You’d wonder how its profits rose

All of the other i-banks
Lost billions on the subprime game
How did that crooked Goldman
Come away with all the fame?

Because it knew how bad it was
And it stoked the flames
At the same time that it made bad loans
It bet that folks would lose their homes

Right now it’s bonus season
And we’re shouting “don’t you see!
Goldman the two-faced i-bank
Pay now or pay in history!”

Frosty the Goldman

Frosty the Goldman
Was a very crafty soul
With a gilded pipe and a lot of dough
And a heart made out of coal

Frosty the Goldman
Was too smart to lose they say
He made awful loans
But he sure did know
How to swindle us for pay

There must have been some magic
In that goldman pipe he smoked
For when he held it to his lips
He made bank and we went broke
Frosty the Goldman
Was as rich as rich can be
But still he’d say
“Make the poor folks pay!
And bring their homes right back to me”

Frosty the Goldman
Knew there had to be a way
To boost his funds
At the end of the run
On the backs of the subprime prey

He plundered and pillaged
Like a felon on the lam
Running here and there all around De Beers
Saying catch me if you can

He led us down the road to debt
And before the market dropped
He even bet we’d lose our homes
And now we holler STOP!

(thief!)

Frosty the Goldman
It is soon your bonus day
Stop telling us lies
We can rhyme “securitize”
And you sure as hell can pay

thumpety thump thump
thumpety thump thump
Look at Goldman go

thumpety thump thump
thumpety thump thump
Give up your dirty dough

Turns out the bankers and brokers haven’t been visited by the ghosts of Christmas present and future and they seem to have held onto their bonuses.

But Connor said caroling was still good fun. And the campaign has just begun. “This is just the beginning of an accountability process. While the investment banks chose not to pay now, they will pay later. They will be investigated and I think it was important to raise awareness of how this works,” he said.